Debt/foreclosure scammer gets 17 in the slammer
MEMPHIS, TN (WMC TV) - A former Bartlett businessman will spend nearly two decades in a federal prison for running an elaborate debt-reduction and foreclosure rescue scam that spanned nine states.
Thursday, U.S. District Court Judge Jon P. McCalla sentenced Charles McKuhn to 17.5 years in prison. McCalla also ordered McKuhn to pay more than $2 million in restitution.
February, a jury convicted McKuhn on seven counts: two counts of mail fraud, four counts of wire fraud and one count of money-laundering.
March 2010, a federal grand jury indictment charged McKuhn and his company, Taurian Worldwide, Inc. (TWI) with bilking more than $500,000 from churches and individuals in the wire-transfer lending scheme.
The indictment said between June 2007 and June 2009, McKuhn, who has no credentials in banking or finance, schemed to defraud "...various individuals and institutions, by representing himself as a legitimate debt reduction service, and international private banker, able for a front-end fee to reduce the debt owed by individuals and institutions and establish lines of credit and secured loans for building projects."
During McKuhn's February trial, pastors from churches in Alabama, Tennessee and Virginia said McKuhn claimed TWI held a federal bond that could be used to underwrite pay-offs of their churches' delinquent mortgages.
"He said he had a 'blanket bond' through the Federal Reserve that could be used to pay down the debt," said Bishop James W. Johnson of Birmingham, AL. Johnson testified his home church is Christ Temple Holiness Church of the Apostolic Faith in Opelika, AL.
Johnson and two other pastors testified they paid McKuhn and TWI cash installments -- one as much as $85,000 -- to either secure lines of credit to pay off their mortgages or to have TWI assume the loans and "discharge" the debt. Johnson testified he even signed on to be a representative of TWI and recruit other pastors.
Each testified McKuhn took their money, did nothing -- and the banks foreclosed on their properties.
McKuhn represented himself, often asking witnesses meandering and confusing questions on cross-examination. McCalla appointed Memphis attorney Sam Perkins to be McKuhn's counsel, but McKuhn ignored Perkins throughout the trial.
"He wouldn't talk to me," said Perkins. "I have no indication at all on where he's going or how I can assist him."
In previous court appearances, McKuhn argued the federal courts can't prosecute him because he's a sovereign American Moor who is not subject to the laws of the United States.
"I'm demanding common law jurisdiction as a Native American Moor," McKuhn said in court last summer. "I do not consent to this proceeding. I'm not a 14th Amendment citizen. This court does not have jurisdiction in this case."
The U.S. Constitution's 14th Amendment provides that "All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States."
According to investigators' case records, McKuhn is a naturalized American citizen. A certificate of birth abroad indicated he was born in 1977 to his American parents at a U.S. Army hospital in Germany. A 2007 state department document confirmed McKuhn is a U.S. citizen.
McCalla told McKuhn his "Moor defense" is a tired, misguided strategy tried by countless defendants in district courts nationwide.
"What (McKuhn's) talking about is gibberish," said McCalla from the bench in the July 2010 proceeding. "I don't think I have any choice but to take him into custody. Since he has no respect for the law of this country, I can't be certain that he won't (flee the country)."
McKuhn has been in the custody of U.S. marshals ever since.
Blake Ballin, McKuhn's former attorney, said the diplomatic immunity/Moor defense is a sign McKuhn is under tremendous pressure.
"I think he's just somebody who's concerned about possibly losing his freedom," said Ballin. "I understand he said a number of things in court that are probably a function of the stress that's been put on him."
In a federal complaint, FBI Mortgage Fraud Task Force Det. Richard Goforth alleged McKuhn and TWI skimmed more than $540,425 in advanced fees from churches and more than $380,272 from individuals.
At McKuhn's bond hearing last year, Goforth testified the money McKuhn stole from churches had surpassed $600,000.
Goforth named Ensley Church of Christ in Birmingham, AL, as one of the churches defrauded by McKuhn and TWI, which previously leased office space in Bartlett, TN, and maintained a mailbox at a UPS Store in Cordova, TN.
According to the complaint, the church's pastor wired TWI $106,540 to close on a $1.3 million line of credit for church construction. The complaint said the pastor received a faxed letter from McKuhn, claiming a bank account had been established to make the funds available.
But, according to Goforth's investigation, "No line of credit, bank loan, or any other funds were forth coming from TWI, Inc..." and "...(the) letter has been found to be false and fraudulent, and the bank account which purportedly held these funds does not exist."
Goforth filed his complaint after an Action News 5 Investigation last March exposed McKuhn as a debt and foreclosure scam artist.
The Action News 5 Investigators reported TWI, also known as Commercial Solutions Consulting Agency, is on the Tennessee Department of Commerce & Insurance Buyer Beware list. It also earned a "F" rating from The Better Business Bureau of the Mid-South (see the BBB's report here: http://www.bbb.org/memphis/business-reviews/foreclosure-services/taurian-worldwide-in-cordova-tn-44035192).
BBB officials, state regulators and investigative sources said McKuhn has deceived hundreds of consumers in at least nine states. They said his company convinces consumers or investors to pay advance fees to either resolve their debt or rescue their homes from foreclosure.
"They do little or nothing, and the people end up losing their home," said Randy Hutchinson, president of The Better Business Bureau of the Mid-South.
McKuhn's business web site (now defunct) and literature described it as a "debt resolution" company that can resolve consumers' debt problems in 90 days, including saving their homes from foreclosure.
A 2008 company report claimed McKuhn has 29 clients, 99 pending applications and more than $900,000 in allegedly "purchased" consumer debt.
The company's complaint file with Tennessee's Division of Consumer Affairs named a Montgomery, AL, couple who lost more than $2,500 to McKuhn.
An Atlanta, GA, office manager lost $5,000.
A Norfolk, VA, couple paid McKuhn nearly $15,000 to "purchase their (debt)," only to discover "...TWI had not taken over the loan."
"(McKuhn and TWI) were apparently selling franchises for what they do in other parts of the country," said Hutchinson.
Facing the mounting debt of two mortgages on her family's fourth-generation house, Glenda Peete of Mason, TN, said she paid a TWI associate $750 to consolidate her mortgages, even though McKuhn's company is neither a licensed lender nor a sanctioned debt counseling agency.
"I was told that in the event my home went into foreclosure that they had attorneys that could go into court, file papers, get my house out of foreclosure," said Peete.
But she said TWI demanded more money to fend off the foreclosure.
"For $1,700 additional dollars, they (said they) would be able to stop the foreclosure," she said. "I told them there is no way I had that amount of money."
Records indicated McKuhn hired Memphis attorney Michael Working to be TWI's registered agent. In an interview with Action News 5, Working said McKuhn hired him to form the company as a "debt renegotiation" service.
Early on, Working said, he didn't see the red flags.
"Not at all. There are plenty of credible debt renegotiation firms," Working said.
But he said as he followed McKuhn's methods -- and as lawsuits started to stack up in his office -- he realized something could be wrong.
"They could be committing crimes with deceptive business practices," Working said. "People who do business with them in the future could be victims of a con."
McKuhn and his TWI associates abandoned two offices in Bartlett: one on Summer Knoll Cv., the other on Kirby-Whitten Rd. north of Stage Rd.
A eviction warrant indicated McKuhn and his wife, Beverly Mays, were forcibly evicted from 6606 Baudette Cv. in Bartlett Feb. 3 for non-payment of rent. Grace Major, the property's landlord, told Action News 5 the couple actually abandoned the property in the middle of the night a week or so before the eviction.
The Action News 5 Investigators eventually traced McKuhn to 5724 Green Valley Rd. in Raleigh-Bartlett. His parents rent or lease the home. It's also the location where U.S. Magistrate Judge Tu M. Pham has ordered McKuhn to stay as a condition of his $50,000 bond.
Two vehicles spotted in the driveway - a $90,000 Mercedes and a late-model Chevy Tahoe - are registered to McKuhn and the address of the UPS mailbox in Cordova.
At McKuhn's bond hearing, Asst. U.S. Attorney Tim DiScenza argued that McKuhn is a flight risk. Goforth testified that a former business associate of McKuhn's told him she feared he planned to flee to Costa Rica. Goforth testified the associate found a brochure in one of TWI's franchise offices. He testified the associate told him the brochure outlined the Central American country's extradition policy.
The U.S. Bureau of Prisons will determine where McKuhn will serve his time.
If you're struggling with debt or facing foreclosure, always deal directly with your lender first. The lender doesn't want you to lose the note. Most lenders are willing to negotiate a payment plan to keep you in the house. In fact, Peete was able to do just that, successfully negotiating with her lender to secure a stay of her foreclosure.
For foreclosure assistance, contact the Memphis Housing Counseling Network at http://memphis.earnbenefits.org/page.php?pageID=607 or call 901-725-8361. Action News 5 also recommends Roshun Austin of the HOPE-Keychain Alliance team of GMAC Rescap at 901-276-0079.
For legal assistance in foreclosure cases, contact Memphis Area Legal Services at www.malsi.org.
For debt counseling and/or assistance, Action News 5 recommends the RISE Foundation (http://www.risememphis.org/), the Memphis Consumer Credit Education Association (http://www.mccea.net/) and Betty Jones King of Second Chance Budget & Debt Family Counseling at (901) 323-0609.
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